The City Council introduced a $54.8 million budget Wednesday night that cuts spending and taxes slightly. The plan covers the city’s expected expenditures and revenues from July 1, 2001 to June 30, 2002.
"This budget represents a fundamental shift in the fiscal and budgetary philosophy of the city," said Mayor David Roberts as he addressed the City Council Wednesday night. "From now on, city taxpayers will benefit from revenues produced by new ratables first, before any new government spending."
Those who wish to comment on the new budget can come to the council meeting on Jan 2 at 7 p.m. After a public hearing, the council can either consider making further changes to the plan, or it can vote to approve it that night.
The proposed $54.80 million budget is approximately $52,000 less than last year’s $54.85 million spending plan. Because of the very slight decrease in spending, coupled with the increase in the ratable base, the city anticipates that there will be a 2-cent per $1,000 of assessed value decrease in the property tax rate. The rate should drop from $7.84 per $1,000 to $7.82. That means that the owner of a $200,000 home would save four dollars on municipal taxes. The overall tax rate, which includes county and school taxes, will be $30.98.
The anticipated total tax levy – or the total amount of taxes the city needs to collect from its property owners – is $16,601,314.
"We know that this was going to be a very tight budget, and it was," said Business Administrator Laurie Cotter Thursday. Cotter, along with the mayor, was the chief architect of this year’s budget. Cotter had participated in budgets on the state and local level before taking the job in Hoboken this summer. She had spent eight years with the Local Government Services Division at the New Jersey State Department of Community Affairs [DCA], the state agency that approves municipal budgets and acts a financial regulatory agency for cities. And just before coming to Hoboken, she served as the business administrator and the budget director in Jersey City.
"This budget is very lean with very little fat," she added. "It covers all of the city obligations and provides for services that the mayor and this administration feel are important. Items like bringing back the Department of Housing Inspections, establishing a Department of Constituent Affairs, and reestablishing the Department of Community Development to manage development."
Financial goals
One of Mayor Roberts’ more ambitious goals is to lessen the city’s reliance on "one-shot" revenues. These are nonrecurring revenue sources that have, in the past, involved selling city assets or making deals with municipal agencies in order to plug budget gaps. These revenue sources are criticized because they only last a year or a few years and never return. Mayor Anthony Russo’s administration had said it was necessary to keep plugging revenue holes with money from such agreements until the new development came on line and could begin contributing to the city’s formerly-stagnant tax base. The city had suffered a structural deficit – or continually recurring budget hole – since the early 1990s when it anticipated millions of dollars from a development deal with the Port Authority that was ultimately nixed by residents.
This year’s city budget has $1 million less in nonrecurring revenues.
The city also had to cover for the fact that last year, the city underestimated what it might have to pay for the city employees’ health care plan. The city budgeted $6.3 million last year but had to spend $7.7 million.
The city was able to cover itself in several ways. According to Cotter, this year there are an anticipated $1.3 million in realized tax revenue from new construction in the city. In addition, the previous administration had a $1.2 million revenue surplus left over from previous budgets.
The city will also receive an additional $500,000 in state aid this year.
Other savings came from streamlining several of the city’s departments without reducing services, the Roberts team said. In the new budget the city will save an estimated $300,000 in legal expenses and $500,000 in accounting and auditing costs.
Also, the new administration has cracked down on the amount of overtime taken by city employees. "We budgeted a $200,000 savings in overtime, which I believe is actually quite conservative," said Mayor Roberts from his office in City Hall Tuesday. "I believe that when everything is said and done those savings might even be much more."
New services and programs
The people that might be happiest about the new budget are the city’s crossing guards. They will be receiving a $1 per hour raise.
"Every day, many of Hoboken’s children walk to our local schools," said Roberts Wednesday. "Watching over them are some of Hoboken’s most dedicated public servants. I am happy to report that because of the savings we have been able to achieve, this budget will provide for the first wage increase for Hoboken crossing guards in 12 years."
The mayor also lauded the establishment of the Office of Community Development. In the budget $210,000 has been allocated for the salary of Director Fred Bado and for the costs associated for the creation of a new master plan to deal with the city’s development. The mayor promised a new plan in the first year.
"Now the city of Hoboken has the human and financial resources necessary to research and develop a new master plan," he said.
In the budget, $157,000 has been set aside for the new Office of Housing Inspections and $78,000 has been allocated for the new Department of Constituent Affairs. "For the first time we will have a central office on the ground floor of City Hall whose sole purpose is to collect, document, and follow-up on resident concerns and complaints," Roberts said. "The theme of this office is accountability. Not only accountability to the mayor, but more importantly, accountability to the people of Hoboken."
Law enforcement salaries make up 36 percent of spending
As is typical for city budgets, the largest expenditures are police and fire salaries. Police will earn a total of $10.8 million and firemen will take home $9.15.
"We have come to know all too well the importance of our police officers and firefighters during this trying time in our nation’s history," said the mayor. "I am pleased to report that the 2002 budget will provide for a strong police department and a strong fire department to ensure the safety of Hoboken’s residents, while instituting policies to curtail excessive overtime."
While their will be $1 million less in nonrecurring revenues this year, the city is still depending on almost $6 million in "one-shot" revenues. The largest one-shot payment is a $3 million agreement brokered between the North Hudson Sewerage Authority and the city in the past that had not been forwarded to the city. As a result, the city anticipates receiving $3.25 million from the deal.
Also, the city is anticipating $2 million from a payment deal inked in the 1990s with the Hoboken Parking Authority, according to the budget. Both of these revenues producing deal were brokered by the former administration, now the new administrations are reaping the benefits of those deals.
Are the cuts enough?
Rather than raise taxes and then blame the previous administration, as public officials sometimes do during their first year in office, Mayor Roberts managed this year to make a smooth financial transition from the also-stable budgets of Mayor Anthony Russo. However, during Russo’s time, Russo was often criticized by residents who didn’t feel that tax stabilization was enough. They said that since Russo had nearly doubled the municipal portion of the tax rate in 1994, he should find ways to drastically cut spending.
Roberts’ spokesman, Michael Estevez, said Friday that the level of spending was probably where it needs to be.
"The budget was a lot of hard work on the part of Laurie Cotter," he said. "The budget is where it needs to be right now."
Estevez said that as more development comes on line, the tax rate should shrink. But spending may stay the same.